Saturday, September 20, 2008

Interventionism & The Lessons of History

This analysis is intended merely to explain that the economic policy of interventionism,which is advertised by its advocates as a progressive socio-economic policy, is based on a fallacy. This book demonstrates that it is not true that interventionism can lead to a lasting system of economic organization. The various measures, by which interventionism tries to direct business, cannot achieve the aims its honest advocates are seeking by their application. Interventionist measures lead to conditions which, from the standpoint of those who recommend them, are actually less desirable than those they are designed to alleviate. They create unemployment, depression, monopoly, distress. They may make a few people richer, but they make all others poorer and less satisfied. If governments do not give them up and return to the unhampered market economy, if they stubbornly persist in the attempt to compensate by further interventions for the short-comings of earlier interventions, they will find eventually that they have adopted socialism.

[ . . . . ]

If there is anything history could teach us it would be that no nation has ever created a higher civilization without private ownership of the means of production and that democracy has only been found where private ownership of the means of production has existed.

Should our civilization perish, it will not be because it is doomed, but because people refused to learn from theory or from history. It is not fate that determines the future of human society, but man himself. The decay of Western civilization is not an act of God, something which cannot be averted. If it comes, it will be the result of a policy which still can be abandoned and replaced by a better policy. (pp. 92-93)

Our system of political economy today is very much interventionist. Of course it is also "capitalist" in that there is a large realm of private ownership of the means of production. One of the important things to learn from this book is that the policies of the interventionist don't accomplish the goals of the interventionist. But not to worry for the interventionist because for the interventionist this just means it will always seem like there is more work to do later on. In other words, the interventionist politician has a pretty good scam working in that the earlier interventions of legislation and regulation just turn into situations later that are seen as needing more legislation and more regulation. Aaron Wildavsky noticed this too, and in SPEAKING TRUTH TO POWER he explained his conclusion that government had never fixed any of the problems it sought to fix. Instead, it was his assessment that government merely created more and/or different problems for the future to face.

Ludwig von Mises ends his analysis of interventionism with the words I quote above. So, he seems to hold some optimism that we can, and might, still learn our lessons from history. Unfortunately, it seems to me that politics today suggests that not enough people have learned these lessons. There seem to be very few voices speaking about interventionism and the present financial situation. Certainly few of our politicians are speaking publicly about the present "crisis" by noting it is likely the result of earlier government interventions.

Take a look also at the policies advocated by the presidential candidates and by our two major political parties. The policy debates tend not to be about reducing the interventionism in our system of political economy, but rather they seem to be about which new intervention will be the better intervention. The "change" being debated is not a change away from interventionism and back toward capitalism. Pity. It seems too many refuse to learn from history.